John Robb: Life in a Networked Age

To access it, let’s make a simple assumption that economics, politics, and warfare are all a function of the dominant technological substrate.

A technological substrate is the family of related technologies that we rely upon. In the 20th Century, we were clearly reliant on an industrial substrate.

The challenges posed by industrial age technologies dictated the development of two management forms: bureaucracy and markets. Bureaucracies and markets are both decision making systems. These management forms dominated economics, politics, and warfare for centuries.

Neither system of management is sufficient as a solution for industrial economics, politics, or warfare.

Democracies use market decision making to determine leadership over a nation-state bureaucracy. Capitalism uses markets to determine leadership/control over corporate bureaucries. Education uses bureaucracy to manage its institutions and a combination of markets and bureaucracy to allocate students. The modern age was dominated by market based warfare (think: Wallenstein) but it is now firmly bureaucratic.

Although ideologies have been built and wars have been fought over the mix of bureaucracy and markets, neither system has proven dominant. .

This simplification is useful when we shift the technological substrate.

In the last thirty years, we’ve seen a shift in the technological substrate. This new susbstrate is increasingly a family of technologies related to information networks.

As this new substrate begins to take control, we’re going to need new management forms. Both bureaucratic and market systems are proving insuffient solutions to the challenges of a networked age.

In both cases, the emergence of a global network is eroding the efficacy of bureaucracy and markets as solutions. How? One reason is scale.

A global network is too large and complex for a bureaucracy to manage. It would be too slow, expensive, and inefficient to be of value. Further, even if one could be built, it would be impossible to apply market dyanmics (via democratic elections) to selecting the leaders of that bureaucracy. The diversity in the views of the 7 billion of us on this planet are too vast.

In terms of markets, a global marketplace is too unstable. Interlinked, and tightly coupled markets are prone to frequent and disasterous failures. Additionally, a global marketplace is easy for insiders to corrupt and rig, as we saw with the 2008 financial melt-down. Given instability and unmitigated corruption, markets will fail as a decision making mechanism.

So, what’s going to replace bureaucracy and markets?

We don’t have digestible names for them yet. However, let’s just call them few to many (F2M) systems and P2P systems. F2M systems are run by a few people and delivered to a great many people. In contrast to broadcast, these systems are interactive and smart. Many use software bots to gather and process data 24/7.

P2P systems allow ad hoc interaction between indepedent individuals. Every node in this type of system is an equal to any other. They are not dependent on each other.

Both types of systems have value. Both have problems. Both are immature. As we move to an information based global economy, we’ll see these systems increasingly dominate the playing field (to the detriment of bureaucracy and markets).

Companies like Google and Facebook run as F2M systems (already, some of the most “valuable” companies in the world have adopted this model). In each case, the core business is so automated, it could be run by a handful of people.

P2P networks are systems like BitTorrent (half of all Internet traffic), Wikipedia and open source software/hardware projects.

We’re seeing both forms of organization increasingly in warfare. F2M hackers vs. the US Defense Bureaucracy in the current cyberwarfare run up. P2P terrorism/guerrillas vs. US Defense Bureaucracy. In both cases, the US loses when it spends $10 m + to neutralize each individual participating in these organizations.

When P2P networks, leveraging F2M systems such as Facebook as platforms, we see governments fall (Egypt to Tunisia).